How To Reduce Insurance Cost After Your Vehicle Has Been Paid Off
One great time to look for cost-cutting in auto insurance cost is after you have made that last payment on a vehicle. Many drivers find they can reduce auto insurance premiums when they no longer have to protect the lender's investment in the car or truck. However, car owners should tread carefully to make sure they are still protecting their own investment they way they'd like to.
Why You Can Save after Paying off Your Car
Lenders who finance a vehicle don't want to take even the smallest chance on their investment, and by law, they don't have to. Lenders just write the responsibility for insurance into the lending agreement. The borrower has to take care to buy a whole lot of coverage including collision and comprehensive insurance, just to satisfy the dealership or bank that is funding the purchase of the vehicle. When the car or truck has been paid off, dropping some of this extensive coverage can lower costs, and as long as the policy holder has a good clear understanding about what they are covered for, they can find some savings potential by taking on a little risk.
How to Cut Insurance Costs
Look at line items on your policy, such as collision and comprehensive coverage. Think about what kinds of costs you may be able to handle on your own in an emergency situation. If you think the risk is worth it, you can take off some coverage, and your premiums will go down. Just talk to the insurance rep and re-negotiate a policy without some of the extras. One such extra is in the form of "gap insurance". Those who are leasing or financing a vehicle need this to cover the full value of their loan or the leasing company's investment. If the car is owned free and clear, this should no longer apply.
Care with Insurance Cutting
It's always good to know where to draw the line in dialing down insurance coverage. Though you may be tempted to drop collision coverage entirely, if your vehicle still has a good amount of value left in it, this can be a mistake. Use tools like deductibles to gradually bring down your collision coverage along with the blue book value the vehicle carries.